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Earnings are up, members are down for Humana in surprising quarter

Who needs a five-star rating when you’ve got $32b in revenue and beef with the feds?

The exterior of a building with a sign for Humana

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3 min read

Despite low star ratings and an ongoing legal battle, Humana saw a surprisingly strong quarter, as reported in Wednesday’s Q1 2025 earnings.

The company brought in more than $32.1 billion in revenue in Q1 2025, just below Wall Street’s estimate of $32.15 billion but well above the $29.6 billion in Q1 2024. The company also reported an adjusted earnings per share (EPS) of $11.58 this quarter, beating Wall Street’s estimate of $10.07.

Prepared remarks noted this better-than-expected performance was partly because there was “a shift in the expected timing” of certain expenses and investments, and partly because of outperformance in CenterWell, Humana’s pharmacy, primary care, and home services segment.

The company lowered its full-year generally accepted accounting principles (GAAP) EPS guidance to $14.68 from $15.88, but kept its adjusted guidance the same at $16.25.

“While there are still challenges to navigate, there are no surprises,” President and CEO Jim Rechtin said during the call.

Seeing stars. Of course, there was one ginormous elephant in the room: The payer was one of several that sued the federal government last year over lower-than-expected Medicare Advantage (MA) star ratings, a metric that determines quality bonus payments.

Humana saw the largest rating drop of any major MA insurer, according to consulting firm Healthscape. Other payers, like UnitedHealth and Centene, got higher revised ratings in December 2024 after filing their own lawsuits.

On April 14, the Centers for Medicare and Medicaid Services rejected Humana’s internal administrative appeal to change its rating, but a decision hasn’t yet been made on its lawsuit.

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Rechtin said Humana execs do not know when a decision will be reached, but the outcome will determine when the company expects to get back to its target 3% margin for MA.

“If you set stars aside, we feel good about the underlying progress of the business,” Rechtin said.

When asked during the Q&A portion of the earnings call how the company would cope if there was no decision by the first Monday in June—the deadline for MA plans to submit bids for the following year—George Renaudin, the company’s president of insurance, declined to share Humana’s pricing strategy “given the competitive nature of the bids.”

Humana’s advantage. The call came weeks after the largest MA provider, UnitedHealth Group, announced a poor quarter following a surprisingly high amount of MA utilization.

Humana—the second-largest MA provider, with 18% of the market—has struggled amid rising medical costs before but wasn’t bogged down by that issue this time after it dropped “certain unprofitable plans and counties,” according to its earnings report. 

The payer expects to lose about 550,000 individual MA members by year-end. It currently has 5.2 million, compared to nearly 5.7 million at the end of 2024. In total, including Medicaid, Humana has 14.8 million medical members, not including specialty membership like dental coverage.

“We’re pleased with our membership changes to date given the members that we gained versus those we exited…with a high concentration of members in our best-performing markets, including markets such as Florida, Illinois, and Texas,” Renaudin said.

Navigate the healthcare industry

Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.